The Philippine Stock Exchange (PSE) will hold its annual stockholders’ meeting Saturday and, as is often the case, it will be highlighted by contentious issues over the board elections.

The main question Saturday will be whether stockbroker-shareholders of the bourse will be able to fully vote their shares which are equivalent to 35 to 38 percent of the PSE’s outstanding capital.

Only for Saturday’s election, the Philippine Association of Brokers and Dealers, Inc. (PASBADI) was able to get a temporary restraining order from the Pasig court against an order by the Securities and Exchange Commission to limit brokers’ voting power to just 20 percent.

In an order dated last April 28, the Pasig court said “the SEC and the PSE, through its [Nominations and Elections Committee], are directed to allow broker-shareholders to vote on May 1, 2010 to the extent of their present shareholdings in accordance with the [rules] then prevailing during the 2009 elections.”

However, the SEC said it has filed a petition with the Court of Appeals to bar the enforcement of the TRO issued by the Regional Trial Court of Pasig. As of press time, the CA has yet to act on this.

The SEC order was based on the provision in the Securities Regulation Code limiting shareholdings in the PSE to 20 percent by any industry group, including brokers, and to five percent for any individual or corporation.

The PSE has been in violation of this provision since it could not convince brokers to divest their shares in the PSE while attempts to issue new shares and dilute brokers had been strongly opposed.

Under the NOMELEC rules, “the number of brokers that may be elected shall correspond to the 20 percent ownership limit, provided that non-brokers may elect additional brokers to the board as long as the total number of brokers shall not exceed 49 percent of the board seats.”

It added that the number of broker-directors in the PSE board who may be voted by brokers will be limited to three (20 percent of 15 seats).

Thus, there will be three broker-director seats, eight non-broker director seats consisting of one president and three independent directors, four directors representing the interests of issuers, investors and other market participants, as well as four free seats comprised of either broker directors or non broker directors.